Minister in favour of rollback of naphtha customs duty in India

05-Mar-08

Minister for chemicals and fertilizers in India is in favour of a rollback of the 5% duty on naphtha imposed in the Budget. Discussions could ensue with the Finance Minister regarding this issue. Haldia Petrochemicals use only naphtha as its feedstock, Reliance Industries uses a mix of naphtha and natural gas. As a thumb rule, feedstock accounts for about 50-60% of the cost of production of petrochemical products. For an estimated 4-5 mln tons that is imported into the country, the duty is expected to create an additional burden at approximately US$150 mln. This significant figure could pose a threat to the bottomlines of petrochemical producers. Additionally, runaway crude values have led to a 35% increase in naphtha prices during the past 7-8 months .